Tax implications of assignment of pre-construction condo to child

[belykoral]

My mother purchased a pre-construction condo in 2016 with the intention of giving it to my sister to use as a principal residence. However, my mother used her name when signing the agreement of purchase and sale without considering the tax implications.
In 2021, before closing, my mother assigned the condo to my sister (over the age of 18) at a nominal amount. My sister will be living in the condo. From my understanding, this means that my mother disposed of the condo to my sister at FMV on the assignment date and will have to pay capital gain tax. Then she can claim a capital gain reserve over five years. I tried explaining this to my mother and she is furious that she has to pay tax when title to the condo was never transferred to her name and she never received any money.
I personally find this unfair as well because if the agreement of purchase and sale was entered under my sister name instead, then the capital gain tax would have been avoided. (In this case, my mother would have given money to my sister to pay for the deposits.)
Could someone please clarify if my understanding of the tax implications is correct?

 

[hyong1991]

My mother purchased a pre-construction condo in 2016 with the intention of giving it to my sister to use as a principal residence. However, my mother used her name when signing the agreement of purchase and sale without considering the tax implications.
In 2021, before closing, my mother assigned the condo to my sister (over the age of 18) at a nominal amount. My sister will be living in the condo. From my understanding, this means that my mother disposed of the condo to my sister at FMV on the assignment date and will have to pay capital gain tax. Then she can claim a capital gain reserve over five years. I tried explaining this to my mother and she is furious that she has to pay tax when title to the condo was never transferred to her name and she never received any money.
I personally find this unfair as well because if the agreement of purchase and sale was entered under my sister name instead, then the capital gain tax would have been avoided. (In this case, my mother would have given money to my sister to pay for the deposits.)
Could someone please clarify if my understanding of the tax implications is correct?

your understanding is correct, but please consult a cpa.
Unless your mum had designated this condo as her primary residences, she would have to pay taxes on her "capital gains"
which would be substantial in this current market.

she should not assign the property to your sister at a nominal amt, this is a very BAD MOVE

if you do that, your sister's adjusted cost base, ACB will be very low,. and the next time she sells per property, her capital gains would be incredibly high

recall, capital gains = FMV - adjusted cost base. imagine if the condo is 1,000,000 and her acb is 5,000. her capital gains would be 995, 000.

 

[belykoral]

My mother purchased a pre-construction condo in 2016 with the intention of giving it to my sister to use as a principal residence. However, my mother used her name when signing the agreement of purchase and sale without considering the tax implications.
In 2021, before closing, my mother assigned the condo to my sister (over the age of 18) at a nominal amount. My sister will be living in the condo. From my understanding, this means that my mother disposed of the condo to my sister at FMV on the assignment date and will have to pay capital gain tax. Then she can claim a capital gain vshare reserve over five years. I tried explaining this to my mother and she is furious that she has to pay tax when title to the condo was never transferred to her name and she never received any money.
I personally find this unfair as well because if the agreeme https://omegle.onl/ nt of purchase and sale was entered under my sister name instead, then the capital gain tax would have been avoided. (In this case, my mother would have given money to my sister to pay for the deposits.)
Could someone please clarify if my understanding of the tax implications is correct?

issue got solved!!

 

[steaky]

My mother purchased a pre-construction condo in 2016 with the intention of giving it to my sister to use as a principal residence. However, my mother used her name when signing the agreement of purchase and sale without considering the tax implications.
In 2021, before closing, my mother assigned the condo to my sister (over the age of 18) at a nominal amount. My sister will be living in the condo. From my understanding, this means that my mother disposed of the condo to my sister at FMV on the assignment date and will have to pay capital gain tax. Then she can claim a capital gain reserve over five years. I tried explaining this to my mother and she is furious that she has to pay tax when title to the condo was never transferred to her name and she never received any money.
I personally find this unfair as well because if the agreement of purchase and sale was entered under my sister name instead, then the capital gain tax would have been avoided. (In this case, my mother would have given money to my sister to pay for the deposits.)
Could someone please clarify if my understanding of the tax implications is correct?

Depending the market rate, there can also be a capital loss. Your mother surely is not a prophet and holds no crystal ball. Don't be mad with your mother. There is no fair and unfair in buying presale condo.